Friday, 30 November 2012

Is Payment Protect Insurance a boon or bane?

The PPI is an insurance policy that protects your payment
capability. In other words it protects you from being a defaulter in paying
your EMIs or other loan premiums. It is just like most insurance policies that
are taken on grounds of unexpected future failure.

The question is “do we need to insure ourselves against
unexpected repayment failure?”

Payment protection Insurance is not necessary for
financially sound persons. But PPI is a boon to the person who is financially
unsecured. This insurance policy covers payments for loans and keeps him from
being a defaulter and protects his creditability. The loan providers, banks and
financial companies sell PPI along with the loan to make sure that they get
back their loan amount. This is done many times without the knowledge of
customer. More that 80% of PPI are sold this way. Many people are not even
aware that they are paying for the
policy along with the loan amount.

The good news is one can approach the ombudsman for paymentprotection insurance claim if he is not told about it at the time of taking the
loan. PPI claim is a tough and time taking process.